PREVAILING RENTAL HOUSING PRACTICES …...RAY Rajiv Awas Yojana SFCPoA Slum Free City Plan of Action USD United States Dollars USD 1= Approx. INR 65 TABLE OF CONTENTS Definitions 3

P R E VA I L I N G R E N TA L H O U S I N G P R A C T I C E S A M O N G U R B A N P O O R

G I Z - I N C L U S I V E C I T I E S P A R T N E R S H I P P R O G R A M M E

CASES OF CHENNAI AND COIMBATORE

TAMIL NADU, INDIA

ABBREVIATIONSEWS Economically Weaker Section

GoI Government of India

GoTN Government of Tamil Nadu

H&UDD Housing and Urban Development Department

HH Household

ICPP Inclusive Cities Partnership Programme

INR Indian Rupee

LIG Low Income Group

MoHUA Ministry of Housing and Urban Affairs

MoHUPA Ministry of Housing and Urban Poverty Alleviation

MTA Model Tenancy Act

NBC National Building Code

NSSO National Sample Survey Organisation

NURHP National Urban Rental Housing Policy

PMAY Pradhan Mantri Awas Yojana

RAY Rajiv Awas Yojana

SFCPoA Slum Free City Plan of Action

USD United States Dollars USD 1= Approx. INR 65

TABLE OF CONTENTSDefinitions 3Executive summary 5

Background 5Key findings 6Conclusion and takeaways 8Context 12

Study methodology 16

City profiles 22

Key findings of the study 26Access to basic services 28Individual household water supply 29Housing conditions 31Rental agreement 32Access to housing imformation 32Willingness to buy property 33Preferred financing of houses 33Rent paid 34Employment 35About the owners of the premises 37

Recommendations 40Conclusions 42Takeaways 44

BASIC SERVICES

Services of drinking water supply and sanitation, drainage, sewerage, solid waste disposal, and street lighting.

CARPET AREA

The net usable floor area of an apartment, excluding the area covered by the external walls, areas under services shafts, exclusive balcony or verandah area and exclusive open terrace area, but includes the area covered by the internal partition walls of the apartment.

CENSUS HOUSE

A building or part of a building having a separate main entrance from the road or common courtyard or staircase, etc.; Used or recognised as a separate unit.

CLASS I TOWN/CITY

A town/city that has at least 100,000 persons as population.

ECONOMICALLY WEAKER SECTION (EWS)Households having an annual income up to INR 300,000 (USD 4,615). States/Union Territories have the flexibility to redefine the annual income criteria as per local conditions in consultation with the Central Government.

FAMILY OR HOUSEHOLDA group of persons who normally live together and take their meals from a common kitchen.

KUTCHA HOUSEPredominant materials of wall and roof are as follows:Wall: Grass, thatch, bamboo,

plastic, polythene, mud, unburnt brick, wood, stone not packed with mortar

Roof: Grass, thatch, bamboo, wood, mud, plastic, polythene, handmade tiles

LOW INCOME GROUP (LIG)

HHs having an annual income between INR 300,001 (USD 4,615) and INR 600,000 (USD 9,230).

PUCCA HOUSE

Predominant materials of wall and roof are as follows:

Wall: Concrete, burnt bricks, stone packed with mortar, galvanised iron/metal/asbestos sheets

Roof: Concrete, burnt bricks, stone, machine made tiles, slate, galvanised iron/metal/asbestos sheets

DEFINITIONS

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SEMI-PUCCA HOUSE

A house which has either the wall or roof made of pucca material.

SLUM

A compact area of at least 300 population or about 60-70 HHs of poorly built congested tenements, in unhygienic environment usually with inadequate infrastructure and lacking in proper sanitary and drinking water facilities.

Note: Definitions from Census 2011 and PMAY guidelines are adopted for the purpose of the study.

Cases of Chennai and Coimbatore in Tam

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EXECUTIVE SUMMARY

BACKGROUNDTraditionally housing policies and programmes in India have been mostly inclined towards promoting ownership housing. However, many urban dwellers prefer to opt for rental housing as it gives them flexibility and mobility. At present, one in every three persons (Census 2011) in urban India stay in rental housing. Although the overall average may seem moderate, cities like Chennai, Coimbatore, Berhampur (also known as Brahmapur), etc., have as high as 40-50 per cent people living on rent in their urban areas. The percentage of rental households (HH) in slums of these cities, however, is marginally lower, possibly due to under reporting.

India is on the trajectory of increased movement. New estimates put forward by the Economic Survey 2016-17 point out that labour mobility in India is between 5 and 9 million annually, indicating a much higher level of migration than has been previously estimated. This accelerated labour flow is envisaged to be primarily the reward of better economic opportunities.

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Recognizing this momentum, the Ministry of Housing and Urban Poverty Alleviation (recently merged with the Ministry of Urban Development, and renamed as the Ministry of Housing and Urban Affairs (MoHUA)) is in the process of finalising a National Urban Rental Housing Policy (NURHP) and a Model Tenancy Act (MTA). States like Odisha, Rajasthan, Karnataka, Kerala have gone ahead to include rental housing as part of their State housing policies, in their present form albeit only, address construction of new rental houses.

Against this background, Inclusive Cities Partnership Programme (ICPP) documented the prevailing rental housing practices in Chennai and Coimbatore (Tamil Nadu). The study is expected to provide inputs to the ongoing policy dialogue on the formulation of NURHP and National Urban Housing and Habitat Policy (NUHHP) 2017. The scope of the study was to document the living conditions of urban poor renters in terms of housing conditions, access to basic services, rental agreements and their spatial preferences in the cities.

A sample survey in Tamil Nadu was conducted for 2,200 HHs assuming a 95 per cent confidence level, and a margin of error (confidence interval) of + -5%. These HHs were selected from areas such as slums with higher number of rental HHs, slums on various land use categories, and non-slum urban poor settlements located on the potential growth corridors. Purposive sampling technique was used to select the respondent HHs.

KEY FINDINGS• Housing Conditions: The proportion of renters

staying in kutcha houses is as low as 1% in both Chennai and Coimbatore. The proportion of semi-pucca structures vary significantly with coimbatore reporting double the number of semi pucca houses than that in Chennai.

o Nearly 90 per cent of the rental households live in one multi-purpose room with or without toilet facility with built-up area up to 150 sq.ft (Chennai: 82 per cent, Coimbatore: 96 per cent.)

o These one room dwellings do not comply


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with minimum 12.5 sq.m (134 sq.ft.) carpet area for a single room house norm laid down by National Building Code (NBC).

• Access to services: Less than 10 per cent rental households paying up to INR 6,000 (USD 92) per month have access to basic services (toilet and water supply) at their premises. Paying a similar rent of INR 6,000 (USD 92) it is more likely to have access to basic services in your premises in Coimbatore than in Chennai. Dependence of public toilet is significantly high for the Coimbatore slums when compared with Chennai Slums. The incidence of HH toilets are more common in both Chennai and Coimbatore for non-slum urban poor areas.

• Rent payment practices: Considering that renters pay on an average 30 per cent of their monthly income as rent, the study infers that:

o Average HH income is in the range of INR 192,000 (USD 2,950) in Chennai and INR 264,000 (USD 4,060) in coimbatore per annum, which is within the EWS income

threshold adopted by Government of TN (GoTN). Interestingly, the average monthly income in Chennai is less than the average monthly income in Coimbatore, which may be explained by access to more formal long term employment in Coimbatore than that in Chennai.

o Renters are paying more to access accommodation in Chennai slums in comparison to that in Coimbatore slums. Most of the renters, paying a monthly rental of INR 3000 (USD 46), would be able to access accommodation in Coimbatore more easily than in Chennai.

o 25 per cent HHs are willing to buy a house, but consider affordability as the main constraint in Chennai. In coimbatore, however, households expressed that they are unsure about their duration of stay in the city and hence may not be willing to invest in buying a house.

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o Informality in rental market: Rental housing market mostly operates informally in both the cities as 98 per cent of the households reported not having any form of contractual agreement.

CONCLUSION AND TAKEAWAYSFrom the findings above, it is concluded that a few critical aspects emerging from the prevailing practices are missed from the ongoing policy dialogue:

• Criticality of the informality associated with urban poor rental housing – Mandating blanket formalisation needs to be re-looked at

• Lack of access to basic services within premises and housing conditions of the existing privately supplied rental housing stock

• Explore possibilities to provide for Government support (direct and/or indirect) for upgradation of existing privately supplied rental stock as against newly constructed rental houses for the urban poor

• Most rental housing in urban poor areas are provided by subsistence landlords

• Transparency in improving access to rental housing, going beyond word of mouth and referrals

Key takeaway points from this study include: • Encourage rental housing supply through

National and State level policy prescriptions and regulatory framework by:

o Integrating housing solutions for urban poor renters in the ongoing housing missions

o Encouraging in-situ improvement of basic services at the HH level, given that majority of the urban poor renters opt for semi-pucca and pucca houses deficient in basic services.

o Create enabling environment to encourage private rental housing supply, specifically in the urban poor segment


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o Focus on need based rental housing provision for young professionals, students, industry workers etc as opposed to only family based rental housing

• Recognise informality associated with rental housing as part of the rental housing policy and

need for a regulatory mechanism in addition to an overarching legal framework to establish a continuum to achieve absolute formality.

• Promote ICT based options to bring in transparency in transactions in the rental market.

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CONTEXTHousing is essentially a private good, and yet has an immense impact on population’s social, economic, and environmental well-being. One of the primary prerequisites for making a city inclusive is the provision of adequate and safe housing to all citizens.Traditionally housing policies and programmes have been mostly inclined towards ownership. With significantly higher estimates of labour mobility in India put forward by Economic survey 2016-171, rental housing solutions are emerging as the most viable options. Rental housing provides flexibility and much needed ‘room to manoeuvre’ ((Oakpala, 1981 in (Kumar, 2001) for the new migrants in the city especially for the urban poor. Other developed countries in the world also demonstrate higher renting proportions (e.g. Germany: 60%; Netherland: 47%, South Korea: 46%) as they move in their urbanisation trajectory.

1Migration of 5-9 million people annually in India

As of 2011, one in every three urban dwellers (Census 2011) in India lived in rental arrangements. Although the overall average may seem moderate, cities like Chennai, Berhampur and Coimbatore reported as high as 40-50 per cent urban dwellers living on rent.Recognising the growing number of people living in rental arrangements in urban areas and the need to steer the rental housing market, a Task Force (TF) on Rental Housing (2013) was constituted by the Ministry of Housing and urban Poverty Alleviation (MoHUPA). The TF recognised that the urban housing shortage estimated at 18.78 million2 cannot be addressed through ownership housing alone. Considering that 95 per cent of this shortage is in the urban poor segment, home ownership may neither be affordable nor viable to subsidise.Over the years, public sector has made welfare efforts to supply ownership housing for the urban poor through various schemes. 2 Technical Group constituted by MoHUPA in 2012 for

estimation of urban housing shortage


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However, the bulk of the housing supply has remained private. The present policies and programmes do not address upgrading private housing supply and focus majorly on supplying new housing stock whether on ownership or rental basis. The rental housing transactions are often dealt informally across different economic strata. NSSO (2008-09) suggested that 25 per cent urban renters lived without formal agreements and only 5 per cent had written agreements. Absence of written agreements makes the tenants vulnerable, exposing them to threats e.g. untimely eviction, revision of rent without consent/notice, overcharging for services, non-access to basic services, among others. The tenants are unable to access any legal protection from potential conflict arising from any of the above-mentioned issues due to unavailability of any documentary evidence. Informality is significantly higher among the urban poor,

often as high as 80 per cent3.Further, studies have shown that rental housing for students or single migrants is a growing phenomenon in metropolitan and Class I cities that requires special attention. Accordingly, it is recognised that a variety of rental housing solutions may be made available for different categories e.g. students, single migrant workers and families.As rental housing market is growing in size and also getting significant momentum, the need to create a robust policy and regulatory framework is felt strongly. Accordingly, based on recommendation of the TF, the then MoHUPA4 is in the process of finalising a National Urban Rental Housing Policy (NURHP) and a Model Tenancy Act (MTA).

3India: Promoting Inclusive Urban Development in Indian Cities, May 2013, CDM Smith and ADB4Ministry of Housing and Urban Poverty Alleviation was merged with the Ministry of Urban Development in 2017 and is now referred to as Ministry of Housing and Urban Affairs

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Various states have also recognised the need to have a rental housing policy with specific focus on the urban poor segment. Odisha is one of the States that has included rental housing in its State housing policy titled “Housing for All in Urban Areas, Odisha, 2015”, although focusing only on construction of new rental housing

STUDY OBJECTIVEDocument the existing practices in private rental housing market used predominantly by the urban poor with respect to housing condition, access to basic services, livelihood linkages, rent payment practices, etc.

RESEARCH QUESTIONSWhat is the living condition of

urban poor rental households in cities like Chennai and Coimbatore in Tamil Nadu?

Under what arrangements do these households live?

What is their spatial preferences in the city?

Parametersfor understanding

the existing practicesin private rental

housing

HOUSINGCONDITIONS

BASIC SERVICESANDINFRASTRUCURE

LIVELIHOODLINKAGES

RENT PAYMENTPRACTICES


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units for the urban poor. Tamil Nadu, on the other hand, is in the process of formulating its State Urban Housing and Habitat Policy, and till now do not have any explicit policy addressing rental issues in the state. However, it is worthy of noting that TN has already drafted a Rental Housing Regulation which is awaiting notification by the state. With a view to provide inputs to the National/State level rental housing policies and legislations, it would be crucial to understand the prevailing rental housing practices among

the urban poor. GIZ-ICPP has been working with partner states of Odisha and Tamil Nadu and decided to undertake a rental housing study the cities of Puri and Berhampur in Odisha and Chennai and Coimbatore in Tamil Nadu. In addition, a short study was also undertaken in the Delhi NCR region to understand the process of sourcing affordable rental housing as well as rental housing practices amongst the urban poor. It is envisaged to analyse the rental housing practices across different city sizes and draw up similarities, if any.

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STUDYMETHODOLOGY


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CRITERION FOR SELECTION OF SURVEY AREASSurvey areas have been selected following a two-stage stratified sampling technique. At the first stage, a stratified sampling is undertaken based on the land use. In absence of documented data, the non-slum urban poor areas have been spatially identified and verified in consultation with the Tamil Nadu Slum Clearance Board. Data on 670 recognised slums were available from Chennai and 256 recognised slums were available from Coimbatore. At the second stage, the slums and non-slum areas were marked on the land use map of the city to understand the land use they have or their precinct land use that they might be serving. This data is then spatially analysed to draw on slums and non-slum areas. It was inferred that the spatial coverage of slums to non-slum areas is in the ratio 2:1. Accordingly, in the sample rental HHs from two-third of slums were included whereas the remaining were drawn from the one-third non-slum areas. Due to non-availability of data with regard to renters in the slums and

The objective of the study was to document the prevailing rental housing practices among the urban poor in cities of Chennai & Coimbatore in Tamil Nadu. For this purpose, it was decided to undertake a sample survey of 1,000 households in the city of Chennai and 1,200 households in Coimbatore. The sample size is arrived at assuming 95% confidence interval and a margin of error of +5 per cent. An additional 200 HHs were surveyed in Coimbatore specifically to focus in the smart City ABD area as earmarked under the Smart City Mission proposal. For conducting the survey, a questionnaire was developed to capture the household information related to their socio-economic condition, physical attributes of dwelling units on rent, access to basic services etc.


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Table 1: Sample drawing for ChennaiLand Use Plan of Chennai – 2006 No. of sample HHs Sample

surveyedLand use categories

Proportions in Chennai Municipal Corporation

AreaSlum Non Slum

Residential 54.23% 330 210 540Commercial 7.09% 50 25 75

Industrial 5.17% 43 22 65Institutional 18.48% 120 60 180

Others (vacant, low lying, water bodies,

Non-urban etc.) 15.02% 100 50 150

Total across different land uses 643 367 1010

Table 2: Sample drawing for CoimbatoreLand Use Plan of Coimbatore – 2002 Zoning Sample Sur-

veyedLand use categories

Proportions in Chennai Municipal Corporation

Area Slum Non Slum

Residential 60% 480 240 720Commercial 3% 24 12 36

Industrial 8% 64 32 96Institutional 10% 80 40 120

Others (vacant, low lying, water bodies,

Non-urban etc.) 19% 151 77 228

Total across different land uses 666 334 1200

non-slum areas all the areas were given equal weightage to be included in the sampling. For the purpose of this study, the slums/non-slum areas on residential land use were included in residential strata, and slums/non-slum areas, even when on residential land use, having precinct land use of industries were included in the Industrial strata. This was followed for each of the land use strata mentioned here.

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Survey areas in ChennaiSurvey areas in Coimbatore


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The sample selected ensures adequate spatial dispersion, as can be seen in the city maps shown here. Equal weightage has been accorded to both tenable and untenable slums in the survey, as in Tamil Nadu, services are extended to all slums beyond five years of their existence.

Purposive sampling was undertaken to select the respondent HHs within the select slum and non-slum areas. In order to make the sample representative, every 10th house of the slum or non-slum area was surveyed. In case the 10th house did not have a rental HH residing in it, the immediate houses were inquired till a rental respondent is arrived at; and the process of finding the next 10th household continued. From each selected location, on an average, 35-40 households were surveyed.

LIMITATION: Current land use proportions were not available and thus the data has been extrapolated to larger

city area assuming similar trend would persist. All slums had the same probability of being included in the sample in absence of rental housing data among the slum dwellers. Moreover, in absence of clear demarcation of slum boundaries, the households selected may have fallen outside the slums. The non-slum urban poor areas are marked spatially from the satellite image and the built form. In absence of any documented secondary data sets, the non-slum area selection is discretionary and may introduce sampling biases. The inferences are drawn for the study based on the opinions/responses expressed by the respondent on behalf of the rental HH selected in the sample. Selection of households are based on purposive sampling which may introduce certain biases as well. The study does not include profiling of the house owners/landlords explicitly. However it captures to a certain extent the perception of the renters about their landlords/house owners. The unequal sampling may introduce some bias in the survey.

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CITYPROFILES


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Largest and capital city of Tamil Nadu; Sixth biggest city and fourth largest urban agglomeration in India (in terms of population).Nicknamed the “Detroit of India”, housing more than one-third

of India’s automobile industry.Biggest industrial and commercial centre in Southern India, and

a major cultural, economic and educational destination.

Municipal area (2011) 174 sq.km.Total municipal wards 155 nos.Total population: City 4,646,732Total HHs 1,106,567Urban rental HHs 565,934 (51 per cent of total HHs)Total population: Metropolitan area 8,653,521Decadal growth (2001~2011) 7 per centTotal slum population 1,342,337Total slum HHs 329,827 (30 per cent of total HHs)Slum rental HHs 142,522 (43 per cent of total slum HHs)

Sex ratio Literacy rate (%)National Average 933 74.04Tamil Nadu State 996 80.09Chennai metropolita area 985 90.23Chennai city 989 90.18

** In 2011, the municipal area of Chennai city was increased from 174 to 426 sq.km.However, the corresponding Census Source: Census 2011

Second largest city of Tamil Nadu; 16th largest urban agglomeration in India (in terms of population).Often referred to as the “Manchester of South India” due to its

cotton production and textile industries.One of the fastest growing Tier II cities in India, and a major

industrial hub in Southern India; One of the largest exporters of jewellery, wet grinders, poultry, and auto components.

Municipal area (2011) 106 sq.km.Total municipal wards 72nos.Total population: City 1,050,721Total HHs 280,560Urban rental HHs 150,622 (54 per cent of total HHs)

Total population: Metropolitan area 2,136,916 Decadal growth (2001~2011) 13 percentTotal slum population 129,181Total slum HHs 34,636 (12 per cent of total HHs)Slum rental HHs 12,224 (35 cent of total slum HHs)

Sex ratio Literacy rate (%)Tamil Nadu State 996 80.09Coimbatore metropolitan area 994 88.87Coimbatore city 997 91.30

** In 2011, the municipal area of Coimbatore city was increased from 106 to 257 sq.km. However, the corresponding Source: Census 2011

Chen

nai

Coim

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Chennai Coimbatore

TOTAL HOUSEHOLDS 1,106,567 280,560

Owned 522,493 123,250

Rented 565,934 150,622

Any other 18,140 6,688

TOTAL CENSUS HOUSES 1,314,125 359,803

Vacant house 43,734 23,214

Residential 1,087,370 275,703

Residential-cum- other uses

16,312 5,562

Chennai Coimbatore

TOTAL HOUSES 1,106,567 280,560

Good 904,152 211,798

Liveable 192,980 66,925

Dilapidated 9,435 1,837

Condition of houses

Source: Census 2011

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KEY FINDINGSOF THE STUDY


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1. Access to basic servicesToilet (Latrine) facility:

Chennai 96 per cent HHs

Coimbatore 78 per cent HHs

In Chennai, 96 per cent HHs have access to toilet facility- be it public, shared or individual. In case of Coimbatore, it is around 78 per cent. The share of the different kinds of toilet facilities is depicted in the Fig 1Evidently, the status of access to toilet is significantly better in case of Chennai with around one in every four persons in Coimbatore having no access to toilets. The percentage of people able to access toilet facilities within premises is significantly higher (70 per cent) in case of Chennai

ACCESS TO TOILET FACILITIES AMONG RENTERS

ACCESS TO TOILET- BY LOCATION

0%10%20%30%40%50%60%70% CoimbatoreChennai

No toiletPublic toiletIndividual Shared outside premises

Shared within premises

0%10%

20%30%40%

50%60%

Chennai CoimbatoreIndividual Shared outside premisesPublic toilet No toilet

Shared within premises

Slum Non-Slum Slum Non-Slum


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compared to Coimbatore (24 per cent). Around 55 percent of renters in Coimbatore are able to access toilet facilities only outside their premises through shared or public toilets.

The pattern is also similar when compared between slum and non-slum areas of the two cities. 7 out of 10 slum dwellers in Chennai have access to toilet within their premises whereas only 2 out of 10 slum dwellers have similar facilities in Coimbatore. The non-slum areas of Coimbatore has significantly better access to toilet within premises than the slums in the city. Non slum areas of Chennai also records a higher percentage of people accessing toilets within their premises when compared to Coimbatore. For Chennai non-availability of toilets is significantly high for slums compared to non-slum areas whereas the same is almost equal for Coimbatore.

2. Individual household water supplyChennai 1 per cent HHs

Coimbatore 11 per cent HHs

The penetration of HH level individual water supply is significantly low in both the cities. Although renters in Coimbator reported 10 times higher likelihood of having access to in-house water supply than Chennai, the overall accessibility remains abysmally low at 10 per cent.The vast majority in Chennai depend on tanker and hand pumps while a few access water through stand posts supplemented by Tanker and hand pumps. Following the same pattern, majority of the renters in Chennai remain dependent on water tankers, wells and public taps. In Coimbatore, on the other hand, the piped water supply penetration is significantly higher where more than two-third of the renters are dependent on stand posts and in some cases, supplemented by hand pumps.

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The study shows that individual access to basic services is very rare among the renters. Less than 10 per cent of the HHs, paying up to INR 6000 per month are able to access in-house individual toilet and water supply facilities. Further, in Chennai, paying rent up to INR 6000 (USD 92) per month do not confirm availability of HH level basic services whereas it is more usual to have them in Coimbatore for the same rental.

Furthermore, about one in every five HHs remain unable to access water supply and toilet facilities even after paying a rental up to INR 6000 (USD 92) per month in the two cities. To summarise, the predominant source for water supply among renters remain tanker supplemented by hand pumps in Chennai and public stand posts supplemented by hand

Tamil Nadu Access to water and sanitation facilities

Rent

Ind Toilet and Ind Water supply

Ind toilet

no ind WS

Shared toilet

ind WS

Shared Toilet no WS

No Toilet

ind WS

No Toilet

no WS

<3000 2% 10% 4% 68% 1% 15%

3000-6000 7% 27% 5% 58% 0% 4%

CHEN

NA

I

COIM

BATO

RE

49%

5%

7%

8%

15%

11%

1%

4%

Tanker+HP Others Individual HH Pub Stand Post Tanker Hand pump Stand Post+Tanker Stand Post+HP

Pub Stand Post

Hand pump Stand Post+Tanker

Tanker

Individual HH Others Tanker + HP Stand Post + HP

65%

14% 11%

1%

1%

0%3%

5%

WATER SUPPLY


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pumps in Coimbatore. For sanitation, renters remain dependent on shared toilet facilities. More than 95 per cent of one-room housing units surveyed are less than 300 sq. m. built up area. About one-fourth of the rental HHs live in one multi-purpose room with or without toilet facility with built-up area up to 150 sq.ft.These one room dwellings do not comply with NBC norms of minimum 134 sq. ft. (12.5 sq. m.) carpet area for a single room house.

ROOMS IN RENTED ACCOMODATION

TYPE OF STRUCTURE

3. Housing Conditions

CHENNAI

59%

1%

40%

COIMBATORE

Semi puccakutchaPucca

85%

1%

14%


CHENNAI

59%

1%

40%

COIMBATORE


85%

1%

14%


CHENNAI COIMBATORE

2 rooms 3 rooms1 room

0.3%

18%

82%

0.2%

3%

96%

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In Chennai the two-room dwelling units are mostly (81 per cent) of size 300-450 sq. ft. In coimbatore, however, 78 per cent renters were living in units having a carpet area of 150-300 sq. ft.

4. Rental Agreement Entering into a rental agreement is not common in India. Chennai and Coimbatore is no excep-tion. 98% of the renters across Chennai and Co-imbatore do not enter into written agreements for renting; city variations are absent. Out of the 2 per cent people who reported to have en-tered into an agreement, it is more common in Coimbatore to register, whereas notarised agreements are preferred in Chennai. Howev-er, there is a clear preference for non-notarised agreements with more than 80 per cent renters resorting to the same.

5. Access to housing information

More than 90 per cent of renters in the two cities access information about availability of

TYPE OF RENTAL AGREEMENT

AVAILABILITY OF RENTAL AGREEMENT

2%

98%

8 %

4 %

88%

Notarised

Registered

Non notarised

2%

98%

8 %

4 %

88%

Notarised

Registered

Non notarised


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houses on rent through referrals. Interestingly one in every 10 persons in Chennai access their rental housing through To-let boards. Negligi-ble number of respondents (less than 1 per cent) reported accessing rental housing through real estate agents.

6. Willingness to buy property A quarter of renters in Chennai and Coimbatore opined that in the coming 5-10 years, they would be able to own a house in the respective cities. Among the 75 per cent who reported inability

to own a house in either of the cities cited lack of affordability as the most common reason for be-ing unable to own a house in Chennai four time more frequently when compared to Coimbatore. Households cited lack of affordability and uncer-tainty about the duration of stay in the city twice more frequently in Coimbatore as compared to Chennai.

7. Preferred Financing of Houses The renters pointed to their preference for financ-ing their homes from the micro finance institu-

OWING A HOUSE IN THE CITYMortgage institutions

Loan from familyand friends

own savings

Micro �nance institutions

Loan from banks

combination 1%3%32%46%

3%15%

0%

10%

20%

30%

40%

50%

60%

70%

Lack of a�ordability

Lack of a�ordability + not sure how long

Lack of A�ordability +Not sure how long + house elsewhere

OtherCombinations

Chennai Coimbatore

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tions. This preference, however, is more common in Coimbatore where 7 out of 10 would resort to MFIs for this purpose. In contrast, 60 per cent renters in Chennai, would prefer to access bank loans for financing their houses. Loans from fam-ily and friends have also emerged as the second most preferred option for housing finance.

8. Rent Paid

In the slums of Chennai, rentals are higher com-RENT PAID

Non-SlumSlum Non-SlumSlum

50%

40%

30%

20%

10%

0%

60%

Chennai Coimbatore

Less than INR 3000 3000-6000

₹

₹

₹

₹

₹

₹

₹₹

₹

₹

pared to Coimbatore. Out of 10 renters, 6 in Co-imbatore are able to access a house on rent for less INR 3000 (USD 46) per month compared to only 3 in Chennai. Chennai slums offer a higher rental of INR 3000-6000 (USD 46-92) per month. The pattern is similar for non-slum renters as well. The likelihood of getting a house at less than INR 3000 (USD 46) per month is higher in Co-imbatore when compared to Chennai.

Inferring from the proportions of rents paid by the surveyd households, it is derived that out of 10 renters surveyed in the slums of the two cities, 3 in Chennai reported to have a monthly income of INR 15,000-20,000 (USD 231-308), whereas in Coimbatore, 5 earn in this range. Among the non-slum renters, the correspond-ing proportions numbers are is 3 and 4 renters respectively. The average income of the renters in slums of Chennai is significantly lower than that in the slums of Coimbatore. The renters in non-slum areas of Chennai have higher income when compared to their slum counter parts, yet marginally lower when compared to the renters


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ESTIMATED INCOME DISTRIBUTION

87

525

128 27186

79 7

916

71 2

251

51100%200%300%400%500%600%700%800%900%

1000%

0%Non-SlumSlum

ChennaiNon-SlumSlum

Coimbatore

10000-15000

15000-20000

20000-30000₹

₹

₹

₹

₹

₹ ₹

₹

₹

₹

₹

₹

₹

₹ ₹ ₹₹

Non-SlumSlum

ChennaiNon-SlumSlum

Coimbatore

60%

50%

40%

30%

20%

10%

0%

25,000

20,000

15,000

10,000

5,000

0

16241

20298 21654

21720

Less than INR 3000 3000-6000 Average Income

₹

₹

₹

₹

₹

₹

₹

₹

87

525

128 27186

79 7

916

71 2

251

51100%200%300%400%500%600%700%800%900%

1000%

0%Non-SlumSlum

ChennaiNon-SlumSlum

Coimbatore

10000-15000

15000-20000

20000-30000₹

₹

₹

₹

₹

₹ ₹

₹

₹

₹

₹

₹

₹

₹ ₹ ₹₹

Non-SlumSlum

ChennaiNon-SlumSlum

Coimbatore

60%

50%

40%

30%

20%

10%

0%

25,000

20,000

15,000

10,000

5,000

0

16241

20298 21654

21720

Less than INR 3000 3000-6000 Average Income

₹

₹

₹

₹

₹

₹

₹

₹

in the non-slum areas of Coimbatore. However, the distribution do not re-veal much variance among the rent-ers in Coimbatore, whether in slums or in non-slum areas. This may be attributed to the access to more sta-ble job opportunities in Coimbatore owing to the incidence of industrial occupation when compared to that in Chennai.

9. Employment

There is a significantly high incidence of self-employed people living on rent in Coimbatore as compared to that in Chennai, whereas the trend is opposite in case of construction workers. More regular salaried employees are from Coimbatore, corroborating to our earlier finding of higher average income per month in Coimbatore. 40 per cent of the renters in Coimbatore are casual labourers

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and 27 per cent are construction workers while the corresponding numbers for Chennai are 27 per cent and 10 per cent. Engaging in domestic work is more common a practice in Chennai than in Coimbatore. More than 90 per cent of the renters employed as casual labour are able to pay less than INR 3000 (USD 46) per month in Coimbatore whereas about one-third of them have to pay between INR 3000-6000 (USD 46-92) per month in Chennai. About one-third of the renters employed in each category of regular salaried jobs, self-employment ventures and construction workers are able to afford a rent of INR 3000-6000 (USD 46-92) whereas the corresponding numbers are less than 10 per cent in Coimbatore except for the self-employed category (19 per cent). one-fourth of domestic workers in Chennai are able to afford rent of more than INR 3000 (USD 46) while in Coimbator 95 per cent of them could only afford INR 3000 (USD 46) per month.

60%

50%

40%

30%

20%

10%

0%

70%Chennai

Coimbatore

Domestic worker

Regular salary/wage employee

Self employed

Casual labour

Construction worker

Casuallabour

Self employed

Regular salary/wage employee

Domestic worker

Construction worker

Chennai < Rs. 3000

Chennai Rs. 3000-6000

Coimbatore< Rs. 3000

Coimbatore Rs. 3000-6000

5%

95%

23%

77%

81%

35%

64%

93%

33%

67%

94%

26%

74%

95%

33%

66%

19% 6% 6% 5%

EMPLOYMENT PROFILE OF RENTERS


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10. About the owners of the premises

Out of 10 renters interviewed, on an average 7 renters reported that the owner of the premises lives in other parts of the city. It is more common in Chennai for the owners to live either within the premises or outside the premises but within the same locality than in Coimbatore. Almost in all the cases in Coimbatore, if the owner is residing in the same premises, they occupy a carpet area of less than 300 sq. ft. on an average as compared to 78 per cent in Chennai. Majority of the owner occupied houses had about 150 sq. ft. of carpet area in Coimbatore (75 per cent) when they live within the same premises; In Chennai, on the other hand only one-fourth of the owners reside in such a small area. More than 60 per cent of the renters do not know whether their landlords/owners have other renter premises in the two cities. It is more common in Coimbatore for the landlords to

have more premises than that in Chennai. The prevalent occupation of these landlords/owners, has been reported as business, followed by casual labour and private salaried. The ones who do not have any additional premises on offer for rent also follows similar occupational pattern. Thus, it points to the fact underlined by many research scholars, that the urban poor rental housing market is primarily served by the subsistence landlords. Disaggregated analysis of the renter’s responses reveal that they perceive landlords/owners to be better placed in terms of access to services.In Coimbatore HH level water supply and individual toilets are more common among the owners than in Chennai. Most of the landlords in Chennai access water supply through shared sources as in case of the renters e.g. public stand post etc. Interestingly, 3 per cent of the owners were reported to not have access to toilets in Coimbatore while no such cases were reported in Chennai.

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30%

40%

50%

60%

70%80%

90%

20%

10%0%

Chennai Coimbatore

Within the same premises

Within the locality In the same city Others

3%6%

14%

25%

60%

1%

79%

12%

RESIDENCE OF HOUSE OWNERS


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RECOMMENDATIONS


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CONCLUSIONS

Trends emerging from the rental housing study in Chennai and Coimbatore mostly conform to the national rental housing statistics. Key findings/observations of the study are summarised in the following four aspects:

Policy and regulatory directions Addressing the need for privately supplied rental housing, and reducing the risk of renting would be essential to create a thriving rental housing market in the State. With increased labour mobility, the need to provide targeted housing options for a number of beneficiary groups, specifically among the urban poor, would capture significant attention. Tamil Nadu is already in the process of drafting a regulation to balance the interests of landlords and tenants, which is expected to reduce the risk to rent. A robust policy direction in this regard would also be required in days to come.

Informality associated with urban poor rental housing Contrary to popular notion, the Rent Control Act5 only favoured renters having contractual agreements. This keeps majority of the renters outside the ambit of this Act. The study points out that 98 per cent of the renters do not have any contractual agreement, thereby making them vulnerable to exploitation and depriving them of any legal protection in case of conflicts. Against this backdrop, it would be necessary to institutionalise such informality by introducing appropriate forms of regulation and para-legal structures, such as Resident Welfare Associations, ward level committees, etc. for effective conflict management and mutual protection.

5Rent Control Act (RCA), introduced initially in 1947 and was last reformed in 1992, is the only form of regulatory framework available for the rental housing in India. These laws were originally conceived to be anti-landlords, but ended up becoming anti-tenants by restricting supply. This resulted in higher incidences of informal rental arrangements.


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Limited access to basic servicesAs per the study, a significant proportion of renters do not have access to basic services (water supply and sanitation) at the household level. Possible reasons could be that urban poor households prioritise living near work places and social networks, thereby compromising on adequate basic services. At the same time, non-availability of serviced affordable rental houses may also be a key constraint for the renters. Usually, a landlord does not report the rental occupier as a separate household. Thus such households remain unaccounted for during the planning process for the improvement/augmentation of basic services in the area. This is also reflected by higher incidence of better

access among landlords as reported by the renters.Information flow of rental housingInformation on rental housing is not available for the urban poor segment at any platform and/or in any centralised location. The information flow is mostly based on word of mouth and through referrals. This restricts the home owners to offer their houses, and the renters from accessing better habitable houses with basic services in the areas of their choice. Interestingly, the second most common method to locate a rental accommodation is through the TO-LET boards put out by the landlords (more common a practice in Chennai than in Coimbatore).

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TAKEAWAYS

Based on the key findings and the conclusions drawn thereupon, a set of recommendations are arrived at. At present, the national Ministry is in the process of preparing a rental housing policy and its legal and regulatory framework for encouraging rental practices. The Ministry is also in the process of preparing the NUHHP 2017. In Tamil Nadu, the policy environment is also firming up with the State Government being devoted to draw up a State Urban Housing and Habitat Policy together with a rental legislation balancing the interest of tenants and landlords. The following take away points are expected to provide inputs to the ongoing policy dialogue: • Encourage rental housing supply through

National and State level policy prescriptions and regulatory framework by:

o Integrating housing solutions for urban poor renters in the ongoing housing missions

o Enabling environment to encourage private rental housing supply, specifically in the urban poor segment

o Encouraging in-situ improvement of basic services at the household level, given that majority of the urban poor renters opt for semi-pucca and pucca houses deficient in basic services.

o Focus on need-based rental housing provision for young professionals, students, industry workers, etc. as opposed to only family-based rental housing

• Recognise informality associated with rental housing as part of the rental housing policy/State Urban Housing and Habitat Policy and introduce a regulatory mechanism in addition to an overarching legal framework. Para legal structures may be introduced for conflict management


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between house owners/landlords and the renters. It would also be important to establish a continuum of intermediate solutions to achieve absolute formality in the rental market.

• Promote ICT based options to bring in transparency in transactions in the rental market and make more serviced rental housing available and accessible to the urban poor segment.

IMPRINTPrepared by: DEUTSCHE GESELLSCHAFT FÜR INTERNATIONALE ZUSAMMENARBEIT (GIZ) GMBH

Registered offices:Bonn and Eschborn, Germany B-5/2 Safdarjung Enclave New Delhi 110029 T: +91 11 49495353 F: +91 11 49495391 I: www.giz.de/india

Responsible: Frank SamolProject DirectorInclusive Cities Partnership Programme (ICPP)E: [email protected]

Authors:Aparna Das, Anindita Mukherjee and Arpan Mazumder

Photo credits: Trinankur Banerjee, Shutterstock

Design: Trinankur Banerjee

New Delhi, IndiaJune, 2018

The Ministry of Housing and Urban Poverty Alleviation and GIZ are jointly implementing the Inclusive Cities Partnership Programme (ICPP) in the framework of Indo-German Technical Cooperation.

The project supports the agenda of Government of India in making housing affordable to the urban poor, with a focus on the improvement of housing and living conditions in slums/ informal settlements. It also strives to synergise with other ongoing urban development programmes in order to promote a more integrated planning and development.

Odisha and Tamil Nadu have been selected as the two intervention States under this project. In this regard, Housing and Urban Development Department, Government of Odisha, has collaborated with ICPP in planning and implementation of select components of PMAY-AWAAS missions in Puri and Berhampur.

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PREVAILING RENTAL HOUSING PRACTICES …...RAY Rajiv Awas Yojana SFCPoA Slum Free City Plan of Action USD United States Dollars USD 1= Approx. INR 65 TABLE OF CONTENTS Definitions 3